At Sean Hannity properties in working-class areas, an aggressive approach to rent collection

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PERRY, Ga. — For years, Fox News host Sean Hannity has poured his fortune into a surprising side venture: a vast portfolio of rental properties in working-class neighborhoods. He described those holdings in compassionate terms when they came to light last month, saying he invests in places that “otherwise might struggle to receive such support.”

But a Washington Post analysis shows that managers at Hannity’s four largest apartment complexes in Georgia have taken an unusually aggressive approach to rent collection. They have sought court-ordered evictions at twice the statewide rate — in a state known for high numbers of evictions and landlord-friendly laws — and frequently have done so less than two weeks after a missed payment.

Property managers at the complexes sought to evict tenants more than 230 times in 2017, court records show. At one, a 112-unit subdivision in a suburb west of Atlanta, 94 eviction actions were filed last year, records show.

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Among the tenants Hannity’s property managers sought to evict, records show, were a former corrections officer and her wife, who fell behind while awaiting a disability determination; a double amputee who had lived in an apartment with her daughter for five years but did not pay on time after being hospitalized; and a single mother of three whose $980 rent check was rejected because she could not come up with a $1,050 cleaning fee for a bedbug infestation.

Some of the court files include notes showing that sheriff’s deputies removed residents. More often, though, tenants who were taken to court avoided eviction by paying their past-due rent along with hundreds of dollars in late fees and other costs, records show. The Post found that property managers repeatedly filed eviction actions against many of those residents.

Told of The Post’s findings, three experts said the pattern suggests that the threat of eviction is being used not just to remove tenants but also to generate revenue.

“When they are serially filing against the same tenants, they are using the courts as collection agencies,” said Susan Reif, head of the Eviction Prevention Project at the publicly funded Georgia Legal Services Program. “It appears they are just trying to increase their profit margin by demanding fees under the threat of being evicted from your home.”

In response to questions from The Post, Hannity’s attorney said in an email that the evictions were appropriate under the circumstances and that Hannity was not involved.

“Mr. Hannity is not and has never been involved in the management of these properties,” Christopher E. Reeves wrote. “Evictions only occur after a material breach of the lease terms, which under Georgia law includes the failure to pay rent when due.”

Hannity is a part owner of Henssler Property Management, the firm that manages the apartments, records show. The other partners are people Hannity has worked with for many years, including Reeves, who has represented him in litigation, and William G. Lako Jr., whom Hannity has identified as one of his financial advisers.

The firm was created in 2012, under the name New Millennium Property Management, as Hannity expanded his holdings to include large rental properties in Georgia. Hannity’s ownership stake, through a limited liability company called SPMK II, was revealed this year in a disclosure required by the Securities and Exchange Commission.

Emails to Lako, New Millennium and Henssler Property Management also were returned by Reeves, who wrote, “We have no further comment.”

Hannity’s real estate holdings were first revealed by the Guardian last month after President Trump’s personal attorney Michael Cohen disclosed in court that Hannity was one of his three clients. Without offering details, Hannity said he had not paid Cohen for legal work but had asked him for real estate advice. The Guardian also reported that eviction filings spiked at one of Hannity’s apartment complexes after he purchased it in 2014.

“It is ironic that I am being attacked for investing my personal money in communities that badly need such investment and in which, I am sure, those attacking me have not invested their money,” Hannity said in a statement last month.

Hannity, who reportedly makes $36 million a year, owns more than 1,000 rental properties in seven states, records show. They are held through more than two dozen limited liability companies that generally start with SPMK, the combined first initials of Hannity and his two children. SPMK entities have spent more than $84 million on properties since 2003, most of them in Georgia, records show. Although ownership of LLCs is not public, Hannity signed a public document in Georgia in 2007 listing himself as general manager of SPMK II. He also signed government documents for loans on two of the complexes.

Hannity’s four largest apartment complexes in Georgia, with a combined 613 units, are the Meadows in Lithia Springs, Hampton Place Apartments in Perry, Vista Ridge Apartments in Gainesville and Legacy Apartment Homes in Brunswick. There were nearly four eviction filings last year for every 10 apartments in those complexes, The Post found.

Landlords statewide have sought an eviction for nearly 2 of every 10 apartments, on average, according to a Post review of the most recent five years of available information on Georgia eviction filings and census data.

In conducting the analysis, The Post consulted with Matthew Desmond, author of the Pulitzer Prize-winning book “Evicted: Poverty and Profit in the American City,” and head of the Eviction Lab, a project at Princeton University to build the first national database of evictions. Court actions against tenants at Hannity’s properties stand out, Desmond said, and at one property, they were “orders of magnitude bigger” than what researchers have found in any county in Georgia.

'Pretty darned quick'

Records show that for residents of Hannity’s properties, an unpaid cleaning fee, a dispute over removing mold or a single missed payment can be the breach that leads to an eviction filing. For Zandra Cosby, it began with a bounced check.

Cosby and her wife, Lashondra Cosby, moved into Hampton Place Apartments — a wooded subdivision with a pool and tennis court about 100 miles south of Atlanta — in 2015, the year after a Hannity company bought the property.

For most of the next year, the couple reliably paid their $750 rent on the first of the month, ledgers show. It was of no concern to them when the new property manager announced that late fees would be imposed on the 4th of each month rather than on the 15th, as they had been, or that, on orders from “corporate,” eviction papers would be filed against anyone who had not paid by the 20th.

Then, health problems forced Lashondra Cosby, 40, to take a leave from her job as a corrections officer. Soon, the Cosbys needed until the second or third week of the month to make rent, along with a $100 late fee.

In late February 2017, one of their rent checks bounced, court records show. A follow-up payment cleared a week later, but when the couple didn’t pay their March rent before the 20th, Hampton filed for eviction, and a judge ordered them to pay $330 in court and eviction fees or move out.

The breaking point was not atypical. The Post found that in a sampling of 50 eviction cases at Hampton last year, tenants owed an average of $760 in rent and were an average of 17 days late when Hannity’s property manager filed for eviction. The average fees charged to those tenants amounted to $376.

To file the eviction papers, Hannity’s property managers turned to PDQ Services, an Atlanta-area eviction services firm whose acronym stands for Prompt Dependable Quality but that advertises it as a play on “pretty darned quick.” PDQ promises on its website that its eviction crews “can remove your tenants quicker and more effectively than anyone else in the business.”

PDQ did not respond to requests for comment.

The Cosbys pawned their PlayStation, video games and a camera to cover the fees. But in each of the next two months, a nearly identical scenario played out: a late payment, an eviction filing and a judge ordering another $330 in penalty payments, court records show.

“They kept us down at the courthouse all the time,” Zandra Cosby said. “I’d have to call out a half-day and try not to cut off my nose to spite my face. I needed to be at work to pay them to stay but in court to explain it to the judge.”

In July, after five eviction filings in as many months, and paying more than $1,000 in late and collection fees, the Cosbys were finished.

Out of money and knowing a PDQ eviction crew could show up any day, they left most of their belongings with friends or in a dumpster and moved into Zandra Cosby’s mother’s one-bedroom apartment in North Carolina. There they remain, the evictions on their records, unsure when they may again have the credit needed to rent on their own.

“I think they just wanted us out of there,” Zandra Cosby said of Hannity’s property managers. “We kept trying, but I finally said, ‘I give up.’ ”

'I had a pretty good plan'

Hannity spoke of the success of his personal investment strategy in March, when he had Lako on his afternoon radio program as a guest. The Fox News host said the vision for his real estate empire was his own, one that required him to buck counsel from his longtime financial adviser Gene Henssler that he invest in stock.

“Slowly but surely, I convinced him that I was more interested in bricks and mortar and real estate investments and things like that. And I think I’ve convinced you that I had a pretty good plan,” Hannity told Lako, the managing director of Henssler Financial.

“You did. You did. You stressed us pretty good, though,” Lako said. “We weren’t in the real estate business back then. So you said, ‘Get in the business,’ and we got in it. We know how to do it now.”

Although Hannity occasionally purchased individual properties through LLCs as early as 2007, his SPMK companies went on a three-year buying binge of multifamily buildings beginning in 2013, acquiring complexes with a combined 982 units, records show.

The purchases in the state were concentrated in the years after housing prices bottomed out. Some properties were bought from distressed owners or following foreclosures.

The first of the apartment complexes, purchased in 2013, was the Meadows, a subdivision of duplexes in a treeless expanse in a suburb of Atlanta.

The Post found that of Hannity’s large complexes, evictions were most frequent there, with 94 requests to evict residents last year, according to court records. Many tenants were taken to court multiple times only to have the cases dismissed after paying late.

A judge ordered Phyllis McKenzie, who lives with her husband and 20-year-old daughter, out of her duplex six times since 2014, records show. Each time, McKenzie said, she managed to stay in her home by paying late fees and court costs.

“The fees add up,” the mail truck driver said recently, shortly after she wrote a check for the latest rent payment, which included $200 in late fees.

In 2014, Hannity added the largest number of rental units to his portfolio with help from a Department of Housing and Urban Development program that insures developers’ private loans. Hannity signed the HUD-insured loans, $6.4 million in borrowing for Hampton and $14.75 million for Legacy, a gated complex in southeast Georgia.

He continues to expand and upgrade his holdings. He took out an additional $5 million in loans insured by HUD last year, this time under the Trump administration, to improve the properties, mortgage records show.

Hannity, through SPMK II, and his partners in the property-management firm — Lako, Henssler and Reeves — are seeking investors to fund another real estate venture, SEC records show. They co-own a property investment fund that has assets valued at $5 million to $25 million.

As of February, the fund had sold $13 million in securities to investors who contributed at least $25,000 each, records show. The fund’s 65 investors are not disclosed in public filings.

In a notice to investors, however, the firm disclosed that the latest venture is intertwined with its management of rental properties, receiving “management, maintenance and leasing and referral fees from its clients.”

Veronica McCoy, who managed Legacy Apartment Homes for New Millennium for about four months in 2016, said the company had “a very low tolerance for not paying rent” and charged “stiff” late fees.

McCoy, 46, who said she left New Millennium over differences with a regional manager, said the company’s “aggressive” tactics rubbed her the wrong way.

“I was told that if someone’s rent was short $2, I couldn’t accept it,” she said, recalling an issue that arose with a particular tenant. “I thought it was ridiculous.”